'U.S. Can't Depend on Trading Obscure Financial Products to Support its Economy'

[Adrienne Selko]

So says, Leo Gerard, president of the United Steelworkers. Today is he speaking at the New Economy Conference in D.C.

He is calling for a "new American industrial revolution—specifically, a 21st century burgeoning of green manufacturing in the United States."

Manufacturing windmills and solar cells is where it's at according to Gerard. Relying on Wall Street didn't work. " As the Wall Street debacle that pushed this country into the Great Recession last year showed, the United States cannot depend on trading in obscure financial products to support its economy. To survive, America must be able to manufacture products of intrinsic value that can be traded here and internationally."

And the numbers support his claims. In the past 10 years the U.S. has lost 40,000 manufacturing facilities. Since Dec. 2007 2 million jobs were lost, putting the manufacturing unemployment rate at 12.4%.

And the trade deficit sits at $7 trillion.

Gerard isn't too happy about where U.S. dollars are landing.
" This is fine with countries like China, Japan and Germany that base their economies on making goods for export. Their factories are humming; their citizens are working and saving. By contrast, U.S. factories are closing; our citizens are borrowing on credit cards and against the value of their homes to buy imported products. And the U.S. government is indebting itself to China to cover its trade shortfall. It’s an unsustainable debt cycle. "

What does Gerard want? "The United States needs a coordinated industrial policy like every other major First-World Country to end that cycle and direct development. Focusing on green-energy development is the way to go—to create jobs, clean the environment and reduce reliance on imported oil."

[rbrooku]

A coordinated national manufacturing policy would include a national healthcare policy. Considering the position NAM has taken on the issue, it looks like America will become a wholly owned subsidiary of Foreign Nations Inc. (if it isn't already).

Is there anything NAM can't get wrong these days?

[les_ott]

I believe it was Adam Smith who said that the only way to create real wealth was to make something. Trading paper with each other at a higher or lower value does not create wealth. All it does is move money from one pocket to the other. Money has no 'real' value. All it has is a perceived value by the person recieving it. In other words it is not tangible like a car, a home, etc. We as a country have lost sight of what made us great and that was our ability to manufacture goods, not our ability to generate paper transfers of wealth. I'm afraid that if we continue down the same path that in the near future we won't be able to make anything at all. Where will that leave us?

[ez_at_large]

Well the path to saving manufacturing in the US might start with paring down the vocabulary of manufacturing along with using the words as defined.

The realization that concepts invented to generate tax revenue do not create profits. Value added as an example. If a manufacturer adds value in the true definition they are doing it at a loss of profit. If not; they then added no value just simply added operations to the product and charged accordingly.

Talent shortage, there is no talent shortage, just a shortage of those that are willing to work at below market wages and without a modicum of job stability. Unless you are from a country that pays no wages and has no jobs.Then any chance looks heaven sent.

Software, it may be a needed and wonderful thing, if it were not a justification for further isolation of those that run the business from those that do the work. "I'm too busy and important to walk out on the floor and see whats happening" "Show me the MRP and ERP results. How about the CRM program how is that autodial program improving contact ?


Lets face facts the present way we operate manufacturing in the US makes the concept of a career in it look foolish to those assesing it as a career path.

The concept of Lean is quite a noble idea. Should the employees see it in the same light as the Owner/Management. Otherwise it will be seen as just another idea to add workload to a smaller workforce. Sooner or later one by one they will vote on their company policy with their feet.

How do we compete with China? India? or a myriad of other low wage countries. Well first we must as a sector of the economy accept that competing with countries whose manufacturing facilities are at a minimum 15 years newer than ours is futile. While we complain about a non-level playing field technology marches on. Manufacturing equipment has a lifetime and to be brutally honest it is when it is fully financially depreciated. By not replacing equipment on a 5 to 7 year cycle you fall behind at an ever increasing rate that can not be justified by the savings in capital equipment expenditures. Unless by some chance you build time machines.

Our education system sees no reason to encourage studies in a field where jobs dwindle. The US turns out the highest quantity of Engineers in all disciplines and what happens, they return home to where they can find employment. Employment at a wage that exceeds their peers who stayed at home.

Our government continues to espouse the idea that education, any education prepares you to go out into the working world. OK so if I am a degreed philosopher am I a superior barista at Starbucks as there are no jobs for philosophers? We need to educate ourselves in what makes us strong.

We have forgotten that to have a functioning society everyone in the society has to feel they are paid fairly. Otherwise we will be creating either a 3rd world country here. Or a class of economic migrants following their trade around the world.

And I tell you; if I have to go to another country to earn my living, I sure wont be mailing any checks to the IRS.

[Rog]

EZ you make some good points,

It's my considered opnion that a few concepts have led us wildly astray in the field of manufacturing.

1) The idea that 'value' is the opposite of 'cost'. They are wholly different concepts. You cannot create value by reducing costs. You can maybe increase profits in the short term but that's all.

2) The focus on data systems. Whilst data based decisions are important in many respects they can easily lose their value if incorrectly interpreted. Two things we should teach mouch more stronly in schools is the ability to a) critically appraise informaton b) hold conversations about it's meaning and application. In a world where so much information is so readily available so quickly much of the data has a very limited shelf life. It may already be old news by the time you get it.

I would love to see some research that questions whether the billions spent on ERP systems has actually made any real return for a manufacturing business. Would that money have been better spent on new facilities and technology?

Those very data systems drive the stock market and it's ever more wild fluctuations. Although that whole system is built on data it is fuelled by rumor and second guessing of the value of futures. Even their own adverts admit that past performance is no predictor of future performance. Does that tell you something?

I might sound like a luddite and in some respects I am. I think we have lost sight of what makes people and the nations that they live in great. That's the fact that 'people do business' and we've forgotten how to treat ech other that way and lost focus on our basic needs (which are not i-phones, the shopping channel and strawberries from Kenya).

Where I would differ is that actually society and manufacturing does need a small number of philosophers. If we had a few more in manufacturing and economics who actually thought critically about the moral implications and long term effects of what we were doing we would probably be in a better situation right now.

Rog

[ez_at_large]

Rog,

I like your thinking!

Although my point is concerning philosophers is that One with a philosophy degree is not qualified beyond one born into a family that grows coffee but could never afford the education the other has.Simply due to a college education.

There is quite the bias toward education even if in unrelated fields vs. experience. Many of us have run smack into a design engineer that comes up with a part or system that can not be manufactured. Only to be bailed out by the machine operator tasked to produce his nightmare of a part, who barely got thru a few Man101 classes at the community college.

When you look at truly successful manufacturing companies their success is due to the involvement of everyone in the company. Everyone knows their job, everyone does their job, and everyone respects that the person tasked with the job is best person to asses how to accomplish the job.

There is an axiom of business that an Entrepreneur can start a business, he can run it for 5 to 7 years of growth, then if he does not bring professional management to take his place the business will stagnate and ultimately cease. This is due to the founder reaching his capacity to handle the day to day.

As it continues to grow under professional management the management will lose sight of the core principles of the business. And operate to satisfy the shareholders quarterly expectations. This is actually unsustainable. Human nature demands more when its expectations have been met. And demands a "blood" sacrifice when they have been not.

What manufacturing in America needs is a workforce of Owners, not more management by Mercenaries.